Most people agree that life insurance is an essential for peace of mind. But both logic and statistics tell us that we are more likely to suffer a serious illness than die before the age of 65.
We look at Critical Illness Insurance.
What does critical illness insurance cover?
Critical illness cover provides a tax-free lump sum payment if you are diagnosed with one of the illnesses covered by the policy, usually including cancer, stroke, heart attack and Alzheimer’s. Most policies also cover permanent disabilities as a result of injury or illness, and some let you include your immediate family.
Critical illness cover is not the same as health insurance. Health insurance provides payments for medical procedures. You can use the payment from a critical illness claim to pay for medical treatment, but there are no restrictions and you can use it to replace an income if you become too sick to work.
Its real value, though, is ensuring that you need not face financial worries if you become ill. You may need to pay for housekeeping or childcare while you are getting treatment. You may need to hire a nurse, or to install specialised equipment in your home. Or you can use your money to do the things you’ve dreamed of, like that trip around the world you always promised yourself.
Instead of digging in to your savings and investments or even assets like your home to fund your treatment, rehabilitation and recovery, you have the cash you need. You can still leave an inheritance to your loved ones who depend on you.
So why don’t more people have it?
There seem to be several reasons why people are not taking up the cover, and the peace of mind provided by critical illness insurance.
The first, and most obvious is that people have not heard of it, or believe that it might be difficult to arrange. In fact, getting this cover can be a simple add on to your existing life insurance, or a standalone policy. There is usually no need for a medical, although you will need to give a medical history.
The second concern is cost. Your monthly premium payments will depend on a number of factors, including your age, the level of cover you take out, whether or not you are a smoker, and your health history. Your current health, weight and your family medical history will all influence the price. Some occupations carry higher risks than others and would therefore increase your premium.
So costs will vary – but you can keep costs under control by setting a limit on the level of cover you select. You may also be able to reduce costs by limiting the conditions that the insurance will pay out for.
The third reason that many people give for not taking out cover is a sincere belief that they don’t need this type of cover. However the facts show a different picture. According to figures published by the Association of British Insurers in 2015, every year, 1m workers in the UK find themselves unable to work because of injury or illness.*
The cost of cover is minor compared with the costs of not having it if a covered serious illness struck.
Getting the cover that’s right for you
To be sure you are getting the cover you need, expert help is essential. At Continuum, we can help you find the cover that’s best for your needs, and at the best price. Call us now on 0345 643 0770, or email us now at [email protected]
abi.org.uk – Funds managed by insurance & long term savings providers, by asset class – 2015*